GameStop May Want to Buy Bitcoin Like MicroStrategy. This May Not End Well. — Barrons.com

Brian Swint and Paul R. La MonicaGameStop wants to be more like MicroStrategy — and those plans are boosting the stock Friday. But it may make the already highly speculative stock even more of a gamble.According to CNBC, which cited people familiar with the matter, GameStop, a videogame retailer, is considering investing in Bitcoin and other cryptos.GameStop didn't immediately respond to Barron's request for comment. But shares were up 5% Friday on the report. The stock has nearly doubled in the past 12 months but is down more than 10% this year.The shift would make the company more like MicroStrategy, which relies on Bitcoin purchases as a core of its business strategy. That might represent a more promising future for GameStop as sales of physical copies of games dwindle. Earlier this week, GameStop CEO Ryan Cohen posted a picture of himself with Michael Saylor, the executive chair of MicroStrategy.MicroStrategy stock is booming. Shares are up more than 365% over the past 12 months as Bitcoin prices have surged to current levels of about $97,000. The company now owns 478,470 Bitcoin. That's worth about $46.3 billion, more than half of the company's nearly $84 billion market valuation.MicroStrategy even decided to change its name to Strategy, ditching the "micro" prefix that suggests a small size. ( Microsoft, which is valued at more than $3 trillion, probably isn't in a hurry to change its name to Soft, however.)It isn't clear that GameStop will follow in Strategy's footsteps though. Michael Pachter of Wedbush Securities, one of just two Wall Street analysts who covers the stock, said in an email to Barron's, that GameStop "already trades at about the same premium to its net asset value as Strategy."So I am doubtful that its share price rises significantly if they convert all of their cash to Bitcoin or other cryptocurrencies," he added. Pachter has a Sell rating on GameStop stock and a price target of $10, which is almost 65% below its current share price.GameStop gained fame as a meme stock, so called because it gained popularity and saw big price gains without any significant change to company fundamentals in 2020 and 2021.The popularity was driven by a large number of retail investors who bought the shares after being prodded by cultural items like pictures and cartoons that were spread on the internet. GameStop, though, struggled as its main business continued to shrink and new bets failed to pan out.Despite GameStop's surge in 2024 after Keith Gill, the meme investor known as Roaring Kitty, took a stake and touted the stock on Reddit and X, shares are still trading nearly 70% below their all-time high from January 2021.So while GameStop could get a Bitcoin boost if the crypto investment reports are true, don't expect shares to get back to their Covid-era heights soon, let alone anywhere near the lofty levels that Saylor's Strategy is trading at. We didn't even mention the fact that Bitcoin prices are notoriously volatile, which could make GameStop stock an even riskier investment than it already is.Write to Brian Swint at [email protected] and Paul R. La Monica at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.